Small Business Loans: A Startup Primer

Scoring a small business loan as a startup is not easy, but chances are better for those businesses that have a good handle on the cost of starting the business and can show a clear plan for their business goals.

A startup business owner looking for a small business loan should first figure out the costs for starting the business, develop a business plan and find any possible sources for investing in the business. 

Cost of Business

A business owner should have a clear idea of how much money is needed before applying for a startup small business loan.

  • determine all one-time costs, including equipment, real estate and licenses

  • figure out the operating expenses, such as utilities, salaries and supplies

  • find a way to cut or defer costs, including borrowing equipment or working from home

Have a Plan

Lenders will want to see a business plan for any startup business applying for a small business loan.

  • Give a clear idea of how the business will work.

  • Lay out the goals of the business.

  • Give financial projections for the first three years of the business.

  • Support the information with financial documents.
Invest in the Business

A loan applicant should show personal commitment to funding the business before asking a lender for a startup small business loan. Funding sources for a startup in addition to a small business loan can include:

  • personal savings

  • investment from friends and family

  • credit cards